November 25, 2009
By Angela Greiling Keane and Makiko Kitamura Nov. 25 (Bloomberg) — Toyota Motor Corp. , the world’s largest automaker, plans to repair accelerator pedals on 3.8 million vehicles in the U.S. that are involved in its biggest recall. The Toyota City, Japan-based company will also install a brake override system on some of the vehicles after drivers reported cases of sudden acceleration, the U.S. Transportation Department said today in an e-mailed statement. The recall affects models of Toyota’s top-selling Camry as well as its Lexus and Prius cars and Tacoma and Tundra trucks. Toyota will reshape the accelerator pedal and, in some vehicles, the floor surface under the pedal, the department’s National Highway Traffic Safety Administration said. The company will develop replacement pedals that will be available for certain models by April, the agency said. Vehicles that are repaired sooner will still get the new pedals when they are ready. The repairs will have “extremely little impact” on Toyota’s earnings, said Kurt Sanger , a Tokyo-based auto analyst at Deutsche Securities Inc. “The cost concerns are not terribly material,” he said. “What you’re worried more about is obviously liabilities,” such as class-action consumer lawsuits. Toyota said in a statement that it was taking the actions “to address the root cause of the potential risk for floor mat entrapment of accelerator pedals.” John Hanson and Brian Lyons, spokesmen for Toyota’s U.S. sales unit based in Torrance, California, didn’t immediately respond to an e-mail seeking comment before regular business hours. The highway safety agency had advised owners of the affected Toyota and Lexus vehicles in October to remove floor mats to reduce the risk of accelerator pedals jamming in the down position. Models Involved The models involved in the recall are the 2007 to 2010 model-year Camry sedans; 2005 to 2010 Avalon sedans; 2004 to 2009 Prius hybrids; 2005 to 2010 Tacoma pickups; 2007 to 2010 Tundra pickups; and Lexus’s 2007 to 2010 ES 350, 2006 to 2010 IS 250 and 2006 to 2010 IS 350 sedans. In 2007, Toyota recalled 55,000 Camrys and Lexus ES 350s in the U.S. for a similar defect. Toyota’s largest U.S. recall to date involved 978,000 vehicles to fix a steering-related flaw that could cause drivers to lose control. Toyota’s biggest previous recall worldwide involved 1.53 million Hilux pickup trucks with faulty steering relay rods. The recall began in Japan in 2004 and was extended to overseas markets in 2005. The 1.53 million is the total number of vehicles recalled globally, Toyota spokeswoman Ririko Takeuchi said. The U.S.-built Camry is the market’s best-selling passenger car, and the Prius is the world’s most popular hybrid-electric model based on sales volume. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net
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August 14, 2009
By Yusuke Miyazawa Aug. 14 (Bloomberg) — Japanese bond sales may exceed a record $109 billion this year as companies led by Toyota Motor Corp. take advantage of borrowing costs lowered by government efforts to end the nation’s worst postwar recession. “This should be a record year,†said Koyo Ozeki , head of Asia-Pacific research for Pacific Investment Management Co. “Corporate earnings are going down, and companies need to replenish their cash flow,†he said in an interview at the Tokyo office of Pimco, manager of the world’s biggest bond fund. Toyota, the world’s largest automaker, sold 130 billion yen ($1.36 billion) of bonds in June, joining Mitsubishi UFJ Financial Group Ltd., Panasonic Corp. and Sony Corp. in helping swell sales this year to 8 trillion yen, from 5.8 trillion yen in the same period of 2008. Bond offerings set a record of 10.4 trillion yen in fiscal 1998, according to the Japan Securities Dealers Association. Borrowing costs have fallen to levels seen before Lehman Brothers Holdings Inc.’s September collapse froze credit markets already reeling from $1.6 trillion of writedowns and losses at banks and brokerages. The spread over Japanese government bonds dropped to 38 basis points on Aug. 11, the lowest since Sept. 12, three days before the Lehman collapse, according to Nomura Securities Co. A basis point is 0.01 percentage point. Europe, U.S. Sales European bond sales this year already surpassed the record $1.1 trillion of 2007, Bloomberg data show, helped by $15.8 billion in euro- and pound-denominated notes Swiss drugmaker Roche Holding AG sold in February to fund its acquisition of U.S. biotechnology firm Genentech Inc. Sales of corporate debt in the U.S. total $903 billion this year, up 32 percent from a year earlier and the most in the period for at least a decade, according to data compiled by Bloomberg. Microsoft Corp., the world’s largest software maker, sold $3.75 billion in its first bond offering in May. With banks still holding back on lending as they deal with their capital constraints, the need for cash at hand is prompting Japanese companies to raise funds to make sure they can pay their bills, Ozeki said. “Liquidity is one of the most important issues,†he said. “They need to build up cash, and at the same time they need to enhance capital, so there should be dual new issues in both debt and equity markets.†Toyota’s cash reserves fell by 1 trillion yen, a 21 percent decline, in the 12 months to March 31, it said June 12, as the global credit squeeze forced the automaker to dip into its own funds to pay suppliers and meet operating costs. ‘Uncertain Environment’ Toyota sold bonds in June to strengthen its financial foundation amid an “uncertain operating environment,†Toyota spokeswoman Ririko Takeuchi said June 12. Mitsubishi UFJ and its two closest rivals, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., sold subordinated bonds this year to bolster so-called Tier 2 capital, a form of funds regulators require financial companies to hold to cushion investors against losses. Prime Minister Taro Aso ’s 25 trillion yen stimulus has helped counter the recession by providing people with cash handouts and incentives to buy energy-efficient cars and electronics. Worsening job prospects and falling wages make it unlikely that once the government spending runs out consumers will lead a recovery that shores up corporate profits. After cutting its target rate twice since November to 0.1 percent, the Bank of Japan has been buying commercial paper and corporate bonds from lenders. It has also offered to lend to commercial banks limitlessly in exchange for eligible collateral. The central bank may extend the emergency credit programs into 2010 should funding conditions fail to improve enough, minutes from its July 14-15 policy meeting show. To contact the reporter on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net
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